Driving in to work this morning, I caught a bit of the Hugh Hewitt show. I’m not sure who Hugh was interviewing, but the topic was the Republican repeal of Obamacare and attempts to improve the legislation as it is taken up by the Senate. The brief segment that I caught (before sliding Rush’s Grace Under Pressure Live into my car CD player) concerned the problem of high-risk people with pre-existing conditions. The guest was explaining that Obamacare dealt poorly with this group of people, “solving” the pre-existing conditions problem via “socializing the risk” – that is, raising premiums on everyone. Instead, the interviewee advocated an “economic high risk pool” approach – rather than subsidizing the higher costs by raising premiums, instead this risk would be appraised and paid for in advance.
If that makes no sense to you, it made no sense to me either. If insurance companies are required to accept patients with higher risk at reasonable premiums, then it doesn’t matter what you call it, the costs will be borne by the young and healthy. Obamacare did this by raising everyone’s premiums. That’s one way. Another would be raising taxes. A third would be raising costs of uncovered services. Raising taxes shifts the burden to the wealthy, who pay the majority of the taxes, and simply allowing the cost of services to go up shifts the burden to users of health care (including for preventative care). Any way you choose to do it, the result is a loosening of free market controls on pricing.
As I’ve written before, I’m no fan of Obamacare, but I was also no fan of the system that
Obamacare replaced. It’s looking likely that I won’t be a big fan of the system replacing Obamacare. Today’s radio interview just brought up another reason why. As long as no one deals with costs, we’ll overpay no matter what the system is. In fact, as we continue to push to cover more patients with “quality” health care (meaning the patient has access to as many health care services as possible) costs will go up and the burden on the healthy, or the wealthy, or the users of the system, will only increase. (Don’t misunderstand me: increasing access to health care is a laudable goal. It’s just an increasingly expensive one unless we simultaneously deal with costs.)
One source of spiraling costs is not one I’ve written about before, and that’s the overuse of services by insured patients (though as we’ll see, this isn’t the fault of the patients). Let me start with the following anecdote. In the past 2 years, I have received 5 x-rays, each on a different body part, every single one of which was negative.
I’m a generally healthy, generally in shape 45-year old, who lifts weights a couple of times a week and plays frequently in pick up basketball games. The basketball is the the most frequent source of injury – a jammed finger here, a hyperextended knee there, and the occasional twisted ankle. Usually these injuries are minor, and I’m back in the gym in a couple of days, but every once in awhile I can’t walk or pick something up over my head, and I figure I’d better go see the doctor. Or rather, I’d better head down to the orthopedic walk-in clinic.
These visits usually go as follows:
Step one. Check in at the front desk with some vague complaint like “sprained my ankle” or “sore finger”.
Step two. Wait 2 hours. Ask self, “Did I really need to come here?” every 5 minutes.
Step three. Get invited back into a little room.
Step four. Wait 15 minutes.
Step five. Get an x-ray on the affected body part from 3 different angles.
Step six. Wait 45 minutes.
Step seven. See the doctor (for six minutes).
Now, x-rays aren’t the most expensive medical tests out there, but they illustrate the
point well. Notice that I was sent for an x-ray (5 times in 5 visits) on the basis of soreness or limited movement following an athletic injury, without ever having been seen by a doctor. In all 5 cases the x-rays were negative. I suspect that had I been questioned by a doctor (or a nurse or PA with experience in orthopedics) they could easily have ruled out the likelihood of a fracture just by asking about the cause of the injury, the level of pain, the amount of mobility, and so forth.
I understand that fractures require immobilization, and so an undiagnosed fracture can be a bad thing. But is there really no other way besides an x-ray to make this diagnosis? I don’t mean with 100% certainty, I mean with reasonable probability. If you’re 97% sure that a fracture didn’t occur, why order the x-ray?
Let me answer the question. When establishing the orthopedic clinic, the medical company recognized they couldn’t very well do so without buying an x-ray machine or two. I couldn’t easily discover how much those cost, but let’s ballpark it at $150,000. (I found a dental x-ray machine for $70,000; I’m going to assume an orthopedic set up is about twice as expensive since it must be configured to target a number of different joints.) Of course, that’s just the unit itself – the clinic will also have to buy the computers, the software, the lead-lined jackets, and who knows what special characteristics the room will be required to have for safety purposes. The clinic will have to hire a couple of radiologists to run the machine. The clinic will have to contract to have the machine regularly inspected and serviced, and will periodically have to replace parts. So we’ve probably got an initial outlay of a quarter of a million dollars, and yearly costs of around a quarter of a million dollars. And that’s just one piece of absolutely-necessary specialized equipment.
As it happens, most insurance companies don’t blink an eye when the clinic orders x-rays. (My insurance is a stickler about MRIs, though, which partly explains why I’ve never had an MRI for any joint injury, despite the fact in every case it would have been far more diagnostically useful. On the other hand, with the possible exception of my lingering shoulder problem, I healed just fine without an MRI in those cases.) So why not order an x-ray for everyone? You’ll catch the 3% of people with an unexpected fracture, and you can recover the costs of maintaining the x-ray machine.
Now for the catch-22. Am I glad my insurance company authorizes these x-rays? Of course! Better safe than sorry. Indeed, if they authorized MRIs as easily, and if my out-of-pocket expenses for those tests would be less (I’d be paying hundreds of dollars for an MRI), I’d gladly have had those for my joint injuries. I might even say that I don’t have quality health insurance given my inability to get an MRI when I need one. Or I might look at someone else who can’t easily get an x-ray like I can and say that person has low-quality coverage. Because if a test exists, we want access to it. But if we get access to it, the doctors will prescribe it and we will submit to it.
With each year that passes, we get more and more accurate tests requiring more and more expensive technology. Access to quality health care will always be defined as having access to the state-of-the-art procedure. And any clinic or doctor’s office or hospital that wants to be competitive will need to have, on site, as many specialized pieces of equipment as possible. But access comes with cost, and costs are always going to be borne by the end-user, no matter how you structure the repayment scheme.
What’s the solution? Usually a free marketer like myself would say that competition lowers prices, but in this case I think the reverse is true. To be competitive, every clinic needs every machine, which means that every clinic has to find a way to recover those costs. If specialized machines were at specialized testing centers, then there would not be a financial incentive for the doctor to prescribe a test that is diagnostically useless 97% of the time. Second, doctors have to exercise more professional judgment (which they do with uninsured people, but less so with insured people). If a test can wait, or if experience and examination can provide good confidence of a diagnosis, the test should not be requested. Perhaps a rule that tests can only be requested after examination of the patient by a qualified person, and that the doctor provide a written description of how that test will aid in diagnosis over and beyond the initial examination.
But I’m not optimistic that either of these suggestions will be instituted. There is too much invested in the current way of doing things. My humerus and fibula and phalanges may all be intact, but the system that determined that is broken, and I don’t need an x-ray to see that.